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Bank News 10 November 2020

Interview with the Head of Cash Management

Interview with Ojinika Shote, Head of Cash Management at Stanbic IBTC Bank PLC, on the evolution of cash management for corporates operating in Nigeria, and the role this service plays in achieving business as well as social, economic and environmental impact.

This interview also highlights the bank’s involvement in the World Health Organisation’s (WHO) programmes targeted at the eradication of wild polio in Nigeria, on the back of the certification of Nigeria as a wild polio-free country by WHO.

  1. As a key component of financial stability, cash management has continued to evolve over time. Can you explain the concept of cash management and expatiate on its evolution in Nigeria and how has it impacted the Nigerian economy?

Cash management is the effective planning, monitoring and management of an organisations liquid or near liquid resources. Being a treasury management function, it entails day to day cash control, ensuring the organisation has enough cash/liquid resources to meet short-term obligations in the applicable currencies, having an efficient bank account structure that facilitates easy and secure payments and quicker collection of receivables.

The cash management space continues to evolve and remain a critical aspect of transactional banking with technological and process advancement. The landscape has evolved significantly over the last decade. We have seen a transition from physical cash solutions, use of cheques and automated clearing house solutions to faster and safer cash management solutions using digital channels for delivery of these solutions, for electronic payments and collections, instant payments and automated reconciliation for business purposes. This transition has gradually reduced the risk associated with cash which organisations have had to bear over time and while these risks are not eliminated, they are being reduced to more manageable levels.

Nigeria is a trail blazer in Africa, setting high standards especially in the area of payment solutions. The introduction of Instant Payments and NIBSS Automated Payments (NAPs) payment gateways by the Nigeria Inter-Bank Settlement System (NIBSS) has propelled us as one of the foremost markets with regards to payments in Africa. This has supported greater efficiency in our clients’ business operations by availing instant/near instant transactions – both single and bulk.

Organisations’ value chains are also transforming into a more digital experience and this is particularly favorable to treasurers who continuously seek ways to optimise capital through efficient management of cashflows and information.

  1. Overseeing cash management for corporates means administering daily inflow and outflow of monies based on the corporates’ business needs. Can you highlight these needs for both local and international corporates operating in Nigeria and what solutions banks are providing in this respect?

When it comes to running any successful business, whether local or international, cash flow is key. An organisation may be profitable but without cash resources available to run its daily operations, it will not survive for long. The role of the corporate treasurer has transformed from a traditional cash management function to one that is significantly more visible, as a strategic partner to the business and involved in corporate strategy; and the bank is dedicated to delivering suitable and customised solutions to enable treasurers achieve their objectives in a secure and cost-efficient manner.

Among the many needs of the corporate treasurer today, effective payment and collection solutions to facilitate cash flow for operations are key. Banks offer a range of solutions that meet this need and with technology, requests have extended to customised solutions integrable to the organisation’s Enterprise Resource Planning (ERP) system to aid customer validation and reconciliation. In addition, since most organisations are multi-banked, and considering the peculiarities of organisations’ route to market, it necessitates that industry aggregators with bank agnostic solutions such as Ebills Pay and NIBSS Pay powered by NIBSS are leveraged to provide a robust service to the client.

Payment solutions have involved organisations signing up to bank’s corporate electronic channels for payments including salaries, vendor payments, tax and cross border payments using different payment gateways – Automated Clearing House (ACH), NIBSS Instant Pay (NIP), Real Time Gross Settlements (RTGS), NIBSS Autonmated Payment System (NAPS) all available to support the different payment types. While banks continually upgrade their technology to cater to evolving client needs, banks also deploy technologies such as Application Programming Interface (APIs) and other forms of connectivity to integrate directly into client’s ERP for direct transmission of banking transactions.

The bank is also able to support treasurers’ liquidity management requirements by recommending appropriate account structures and tailored liquidity management solutions using sweeping and target balancing products among others, to maximise returns on idle balances while ensuring sufficient liquidity when required.

Organisations require useful information and actionable insights to support cashflow forecasting, business planning and strategic decision making. Banks provide useful data points and analytics that equip the organisation to identify and take advantage of new business opportunities.

  1. As Head of Cash Management at Stanbic IBTC Bank, your team enables corporate clients attain their business’ cash management goals. What are the implications of successful delivery, both to the organisations and the economy?

It is rewarding to see how our advisory and solutions drive efficiency in our clients’ operations towards achieving their strategic imperatives. With each successful delivery to our clients come the fulfillment of a promise made as a committed partner that supports them towards attaining their objectives.

Our approach is purely client-centric one where we seek to understand the client’s pain-points and resolve them leveraging technology-based solutions. The focus of each client request is customer satisfaction and the opportunity to partner with them to arrive at a customised solutions that will make a difference in their business and value chain.

A successful and thriving organisation contributes and supports the growth of the Nigerian economy by its direct contribution to Gross Dometic Product (GDP), also through the ecosystem it supports as an anchor. The more the organisation demands the adoption of digital practices and solutions across its ecosystem and value chain, the faster the rate of digital adoption and financial inclusion.

  1. Do you see any correlation between proper cash management for organisations and Social, Economic and Environmental (SEE) impact? How has cash management contributed in this area?

Stanbic IBTC is committed to supporting sustainable business in Nigeria. Our banking principles provide a framework for ensuring that we create the future of banking by aligning our strategy and business with the vision for a better society.

This is evident in our partnership with the World Health Organisation (WHO) on the Direct Disbursement Mechanism (DDM), a  payment project to support volunteers, mostly indigenes of the rural communities who participate in the implementation of the polio vaccination rounds that take place across the Nation. Without stipends successfully paid to these volunteers, the DDM project would have been threatened and this amazing milestone of achieving a Polio-Free-Status would have not been met.

It is our honour to be the banking partner that supported the WHO and the Federal Government of Nigeria in achieving this remarkable feat, despite complexities around logistics, planning and managing operations at grassroot levels.

  1. With respect to WHO’s efforts concerning the eradication of wild polio in Nigeria, can you summarise the geographical spread of the solution provided by Stanbic IBTC Bank to WHO and the beneficiary size?  

Our participation in the project commenced as a physical cash payment solution to WHO beneficiaries across all 36 States of Nigeria including the Federal Capital Territory (FCT). These payments covered the most remote local government areas in these states. The Bank worked with WHO to determine central payment hubs closest to each Local Government Area (LGA) across each state. In terms of geographic spread and to put it in perspective, WHO was confident that in order to fully eradicate the wild polio virus from Nigeria, they had to operate in all LGAs across Nigeria which is precisely the coverage area that this solution was able to deliver to. The beneficiary size on a yearly basis is over 1.5 million beneficiaries.

In line with our client promise, we stayed close to the client and were able to migrate to more automated payment solutions with the use of our Mobile Money wallets and bank accounts. Using these solutions, we can reach beneficiaries in very remote locations where terrain or security was an issue, whilst cutting down operational costs on the project.

  1. In the face of the Covid-19 pandemic, we saw a rise in the use of digital transfers powered by fintech’s. How has digitisation affected cash management in Nigeria?

The pandemic has fast-tracked the adoption of digital solutions by organisations. We have seen a faster uptake of solutions and less resistance from those who hitherto were not yet ready to go digital.

In the last five (5) years, the bulk of electronic transfers happening in the corporate landscape has been powered by industry aggregators such as NIBSS and Interswitch.

The progress described around FinTech is a welcome evolution within the financial markets space. More corporates are requesting for information around their value chain as well seeking to outsource some back-office operations such as receipting. The work done by some of these FinTechs have added value in this regard. Stanbic IBTC’s approach is to collaborate with the FinTechs to deliver well rounded solutions to our esteemed clients.

  1. The pandemic impacted the economy severely, causing a standstill in some sectors. How were banks able to meet the cash management needs of their local and international clients across various locations in Nigeria during the lockdown?

During the lockdown period, banks were deemed as essential services by the Presidential Task Force. A strategic selection of our branches remained open to customers to support their banking transactions during the lockdown; as expected, most customers also leveraged our bouquet of electronic solutions to meet their cash management needs.

However, we undoubtedly noticed the impact of the pandemic in changing the perspective of previously hesitant clients to adopt digital solutions and the reliance on electronic channels for banking transactions. This was imperative for business continuity and organisations already on the digital journey felt a much lower impact than those that were yet to begin.

Stanbic IBTC Bank remains a strategic partner to its clients on different stages of their digital journey and we continue to work hard on the implementation of our digital strategy which is aligned to relieving the pain points currently faced by customers, retail and corporates alike.